Free ad-supported music leads to more sales

Since CBS-owned Last.fm re-launched its free ad-supported music service in January, with licenses from all four of the major labels, overall CD and download sales through the site’s partnership with Amazon.com have experienced a 119% increase. The upturn in sales can be accredited to an increase in new visitors as well as existing users who, according to Last.fm, have purchased 66% more music than they did prior to the free-on-demand offering. Last.fm also has affiliate deals with iTunes and 7Digital.

Last.fm’s co-founder, Martin Stiksel said in a written statement: “In just over two months it’s become clear that people will buy CDs and downloads if they get access to the kind of service we offer. No one else can give music fans this amount of music for free — but more importantly also drive their discovery, as we do through our unique recommendation engine. That’s why people are sticking around on Last.fm — minutes spent on site are up 118% month-on-month — and discovering new music to listen to and buy.”

It’s not really all that surprising that an Internet radio type of service is providing leads to music sales — it’s hardly a novel concept. Listen and discover new music for free, then purchase it for repeat listening on any device, including iPods. Not only does Last.fm have better tools for discovery than traditional radio but the site’s restrictions also give a gentle nudge towards purchasing, whereby each track can only be streamed three times for free before you’re redirected to a music store.

last100 is edited by Steve O'Hear. Aside from founding last100, Steve is co-founder and CEO of Beepl and a freelance journalist who has written for numerous publications, including TechCrunch, The Guardian, ZDNet, ReadWriteWeb and Macworld, and also wrote and directed the Silicon Valley documentary, In Search of the Valley. See his full profile and disclosure of his industry affiliations.